WhatsApp: The inside story

In early December, Wired's editor David Rowan spent three days with the WhatsApp founders and was given unprecedented access to them and their business. His full feature appears in the next edition of Wired's UK edition, published on March 6 (and with subscribers a few days earlier). Here are extracts from the feature.

When he was living on welfare, Jan Koum's family collected food stamps a couple of blocks from the unmarked Mountain View office that now houses his messaging company, WhatsApp.

An émigré at 16 from Communist Ukraine—where phones were routinely tapped and classmates questioned for mocking politicians—Koum and his mother could rarely afford to call family back home.

So when, at 31, he left a job at Yahoo! with enough cash to launch his own business, it made absolute sense that he would work on democratizing phone-based communications. He had just three rules as he experimented with the early iterations: his service would defiantly not carry advertising, an experience satisfyingly absent from his Soviet upbringing; it would not store messages and thus imperil individual citizens' privacy; and it would maintain a relentless focus on delivering a gimmickless, reliable, friction-free user experience.

Five years after launch, WhatsApp is among the world's most popular and profitable phone apps—and one which Facebook has just acquired for $16 billion, plus $3 billion for its founders and small staff. On a typical day in January, more than 18 billion messages were sent through its network, two billion more than in early December—and a whisper away from the 19.5 billion sent daily via SMS. Because some messages went to multiple recipients, that amounted to 36 billion daily messages received. Some 450 million people are active monthly users (including a quarter of the UK population), up from 400 million in December, 300 million last July, and 200 million last January. That "active" sets WhatsApp apart from many big-number competitors: as Koum huffed on Twitter last May, "Comparing total registered users and active users is like comparing Ferrari 250 GTO with a skateboard." And most of them are paying a pound, a euro, or a dollar as an annual fee.

How did an avowedly nontechnical founder build a product that, at current growth, is on track to cross a billion users early next year? How, in a market saturated with mobile-messaging apps, has it stayed ahead of Apple's iMessage, Tencent's WeChat, Facebook Messenger, Snapchat, LINE, Kik Messenger, Kakao-Talk, and more—and all with a staff of just 50?

People need to differentiate us from companies like Yahoo! and Facebook that collect your data and have it sitting on their servers.

Pinned to Koum's desk in his open-plan office is a handwritten note signed by his cofounder and early investor, Brian Acton: "No ads! No games! No gimmicks!" Alongside the note is a pair of walkie-talkies that Koum is using to understand better how to simplify the voice-messaging function.

"We're the most atypical Silicon Valley company you'll come across," says Acton, a clean-cut, red-faced 42-year-old from Michigan, whose appearance contrasts markedly with Koum's 188cm-tall, dark, unshaven look. "We were founded by thirtysomethings; we focused on business sustainability and revenue rather than getting big fast; we've been incognito almost all the time; we're mobile first; and we're global first." He and Koum, he adds, are "the yin and yang—I'm the naïve optimist, he's more paranoid. I pay attention to bills and taxes, he pays attention to our product. He's CEO. I just make sure stuff gets done."

Acton was employee number 44 at Yahoo!, working on display advertising, shopping and travel, then keyword advertising. A computer-science graduate from Stanford, he'd grown up in suburban Florida playing golf: his adoptive father had attempted a professional golf career, while his mother had built an air-freight business. In 1997 he interviewed Koum for a job in systems security. They both left Yahoo! on the same day, October 31, 2007. They kept in touch as they slowly considered their next moves, often playing ultimate frisbee together. It was Koum's birthday, February 24, 2009, when he ran excitedly on to the frisbee field and told Acton that he'd just registered a company to make a phone "status" app. It would be called WhatsApp—"Zap" was another contender—and would simply indicate whether it was convenient to receive a call.

The first release, in May 2009, went nowhere. But a month later, Apple introduced push notifications in iOS 3.0. That led Koum to rethink WhatsApp as a full, cross-platform messenger app that would use the phone's contacts folder as "a prebuilt social network," and the phone number in place of a login. He had gone through three Skype accounts the previous summer because he couldn't remember his passwords and user names, and he was determined to make his app "just work." By September, when it went live, Acton had decided to join Koum, to lead an investment round, and to experiment with business models that would bring in revenue but also ensure controlled growth that their infrastructure could support.

"We'd grow superfast when we were free—10,000 downloads a day," recalls Acton. "And when we'd kick over to paid, we'd start declining, down to 1,000 a day." At the end of the year, after adding picture messaging, they settled on charging a one-time download fee, later modified to an annual payment.

From the start, they refused to carry advertising—which, according to Koum's first tweet, on August 28, 2011, channelling Fight Club's Tyler Durden, "has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need."

"There's nothing more personal to you than communicating with friends and family, and interrupting that with advertising is not the right solution," he says now. "And we don't have to know a lot about our users. To target advertisements well, companies need to know where you are, what you might be doing, who you might be with, what you might like or not like. That's an insane amount of data. Besides, I grew up in a world with no advertising. There was none in the Communist Soviet Union."

Koum, 38, grew up Jewish and "a rebellious little kid" in a tough village outside Kiev. "It was so run-down that our school didn't even have an inside bathroom," he says. "Imagine the Ukrainian winter, -20°C, where little kids have to stroll across the parking lot to use the bathroom. Society was extremely closed off: you can read 1984, but living there was experiencing it. I didn't have a computer until I was 19—but I did have an abacus."

Other sample extracts from the Wired magazine feature:

The founders' insistence on focus

"The F-word here is focus," Koum says. "All software bloats to the point when it sends and receives e-mail. Jamie Zawinski said that. The difficult part for us is adding features without making the product more complicated." Acton adds: "People ask for a desktop version, for user names—but we focus on the utility of the app, its simplicity, the quality of the service. Ads, games, gimmicks—that stuff gets in the way. We don't want to build a hookup app so you can find someone weird to talk to. It's not what we're about. We're about your intimate relationships." When they add new features, it is only after intense discussion and experimentation and a conviction that execution will simplify rather than bloat the service. For the recently rolled-out push-to-talk voice messaging, it takes a single tap to record and send a voice message; to play it, a phone will automatically switch from speaker-mode to soft volume when its proximity sensor detects that it's being held near an ear.

The founders' view of Snapchat

"It's not 100 percent clear to me what's working about Snapchat," Brian Acton says. "Great, teenagers can use it to get laid all day long. I don't care. I'm 42, essentially married with a kid. I don't give a shit about this. I'm not sexting with random strangers. I send the 'I love you's in text. She's sending me photos of our baby. These are memories. It's not clear to me that being goofy with Snapchat necessarily creates that level of intimacy. Clearly [Snapchat cofounder] Evan Spiegel only has his pulse on one part of the world. We have a whole wall of stories about people who got to know each other long distance and eventually got married. You're not going to do this over Snapchat. And people want chat histories. They're a permanent testimony of a relationship."

On whether governments have demanded access to WhatsApp servers

"There really is no key to give," Koum says. The US National Security Agency, he insists, has no access to users' messages. "People need to differentiate us from companies like Yahoo! and Facebook that collect your data and have it sitting on their servers. We want to know as little about our users as possible. We don't know your name, your gender… We designed our system to be as anonymous as possible. We're not advertisement-driven so we don't need personal databases." This is more than a business position for Koum. "I grew up in a society where everything you did was eavesdropped on, recorded, snitched on," he says. "I had friends when we were kids getting into trouble for telling anecdotes about Communist leaders. I remember hearing stories from my parents of dissidents like Andrei Sakharov, sentenced to exile because of his political views, like Solzhenitsyn, even local dissidents who got fed up with the constant bullshit. Nobody should have the right to eavesdrop, or you become a totalitarian state—the kind of state I escaped as a kid to come to this country where you have democracy and freedom of speech. Our goal is to protect it. We have encryption between our client and our server. We don't save any messages on our servers, we don't store your chat history. They're all on your phone."

On being acquired by a large company

(quoted before the Facebook acquisition) Jan Koum says: "We worked in a large company, and we weren't that happy. Facebook Google, Apple, Yahoo—there's a common theme. None of these companies ever sold. By staying independent they were able to build a great company. That's how we think about it." Brian Acton adds: "I worry about what [an acquiring] company would do with our population: we've made such an important promise to our users—no ads, no gimmicks, no games—that to have someone come along and buy us seems awfully unethical. It goes against my personal integrity."

102 Reader Comments

Money money money....I hope Zuckerberg doesn't ruin Whatapp like the way facebook has ended up. There are a thousand checkboxes and options to make my stuff private and even them i'm reminded some of my stuff might be public.- Tick this box to hide this post from you neighbours,- Tick this box to hide this post from your friends- Tick this box to hide this post from you mom* Please know that some of your posts will still be public.

[Brian Acton adds: "I worry about what [an acquiring] company would do with our population: we've made such an important promise to our users—no ads, no gimmicks, no games—that to have someone come along and buy us seems awfully unethical. It goes against my personal integrity.]

Really? $19 Billion > Personal Integrity.

It is amazing how a SMS company worth $19 Billion. Since WhatsApp has no Ads right now, it will be interesting to see how will the add-on Ads affect the population. We will learn once they add Ads to Instagram.

I'll confess I never used WhatsApp because I always assumed it was yet another instant messaging program. I already have SMS/MMS for phone-to-phone and Gmail/Hangouts for chats between multiple browsers, phones, and other platforms.

After reading this article it seems like it was addressing a different market--people who would rather pay a small yearly fee than view advertising or help build a targeting profile for a company's other advertising services.

I'm not necessarily anti-advertising in all circumstances (sometimes people just won't or can't pay for something directly) and it serves a purpose but I think it's great that a company offered a paid option.

If it had cost a few bucks up front I'd be more likely to use it (as opposed to another recurring fee for me to forget about) but it seems with Facebook buying them up, it will be up to another upstart to go after this market.

Of course, everyone has a price. Even those who built a system inspired by painful memories of surveillance. Congrats to the team. They achieved what many of us dream of, but only few will ever do (not having to worry too much about the price of something you want).

I'll confess I never used WhatsApp because I always assumed it was yet another instant messaging program. I already have SMS/MMS for phone-to-phone and Gmail/Hangouts for chats between multiple browsers, phones, and other platforms.

After reading this article it seems like it was addressing a different market--people who would rather pay a small yearly fee than view advertising or help build a targeting profile for a company's other advertising services.

I'm not necessarily anti-advertising in all circumstances (sometimes people just won't or can't pay for something directly) and it serves a purpose but I think it's great that a company offered a paid option.

If it had cost a few bucks up front I'd be more likely to use it (as opposed to another recurring fee for me to forget about) but it seems with Facebook buying them up, it will be up to another upstart to go after this market.

For a long time it was the only IM app that:

1) was available on all phone platforms (way before google hangouts on iphone)2) was any good3) other people had

I use it because I can pretty much rely on the fact that others are going to have it. Once something social has reached a critical mass like that (e.g. facebook) it becomes practically unstoppable.

Well at least Facebook can update WhatsApp to send the advertising id of the device to there servers so they can then link phone numbers (WhatsApp uses) to Facebook accounts for those using the Facebook app as well (which can access the same identifier).

I can't imagine Facebook purchasing this company just to have access to the $1 dollar per year per customer -- there's got to be some other way they plan to leverage this to justify the cost. Right off hand, I can't think of anything Facebook might do with this that wouldn't make me look for another service or go back to "regular" texting.

I can't imagine Facebook purchasing this company just to have access to the $1 dollar per year per customer -- there's got to be some other way they plan to leverage this to justify the cost. Right off hand, I can't think of anything Facebook might do with this that wouldn't make me look for another service or go back to "regular" texting.

FB was just protecting its perceived value. Any social network growing besides it (and being popular, unlike Google+) is a threat to the notion of FB being the unavoidable behemoth that sooner or later everyone with an internet connection has to succumb to.

People were using whatsapp to communicate with friends & family. FB claims a monopoly on that. So they can either destroy whatsapp - which they tried - or assimilate them.

Guess 3billion for them was the price.But still, while they had the company, they ran it by their rules/moral.But on the other hand if they wanted the company to be more viable they could up the price to 5$. I guess if the service was that good users wouldn't mind.

I don't have a Facebook account but use WhatsApp daily to keep up my close relationships. This is horrible news.

Sure WhatsApp might be run as a separate company, but that company is going to have a directive to integrate WhatsApp and Facebook on the server side. I'm dreading the day Facebook allows you to start adding _friends_ by mobile number. Then all that pointless Facebook drivel can start being pushed to my WhatsApp number.

I still think there's a lot of room for a "not-Skype" that offers end-to-end client-side encryption for chat, audio, video, file transfer, and encrypted cloud storage of the profile, contacts, and shared data. The tools are all there, someone just needs to put it together in an acceptable cross-platform package.

I still think there's a lot of room for a "not-Skype" that offers end-to-end client-side encryption for chat, audio, video, file transfer, and encrypted cloud storage of the profile, contacts, and shared data. The tools are all there, someone just needs to put it together in an acceptable cross-platform package.

I think the key here is "acceptable". I can think of some software that does most of this but it simply sucks in its infancy.

"Brian Acton adds: "I worry about what [an acquiring] company would do with our population: we've made such an important promise to our users—no ads, no gimmicks, no games—that to have someone come along and buy us seems awfully unethical. It goes against my personal integrity.""

While I can respect that opinion, it's funny to read they just sold to Facebook which is one of their #1 things they wanted to *not* be like.

That all said, I can't blame them. That's a hellova lot of money and I know *I* personally would be all in at that point, ethics be damned. He isn't selling out for a Big Mac and a waffle cone.

I was just thinking this. Doing all the things to separate yourself from Facebook, and then quite literally 'selling out,' seems dodgy.

Exactly what I was thinking. Though when billions of dollars get thrown around, very few people would struggle with their own integrity. The little guy with the halo on your right shoulder would be drowned out by the little guy with the horns on the left, so to speak.

What will be most telling is what WhatsApp's founders do after this. Are they using their new-found wealth to fund a new start-up? Funding charities working to improve conditions in foreign countries? Or are they just going to buy themselves an awesome house, and fund weekly trips to Disney World for life...

Can't say I blame them for any of those, but it will speak to their motivations for selling.

I still think there's a lot of room for a "not-Skype" that offers end-to-end client-side encryption for chat, audio, video, file transfer, and encrypted cloud storage of the profile, contacts, and shared data. The tools are all there, someone just needs to put it together in an acceptable cross-platform package.

I think the key here is "acceptable". I can think of some software that does most of this but it simply sucks in its infancy.

Yeah, that's why I said "tools". Stuff like encrypted secure transfer protocols and high-quality open source chat, audio, and video codecs are available. We just need someone a bit more ambitious and a bit more principled than WhatsApp to plug it all into usable package for the masses.

I still think there's a lot of room for a "not-Skype" that offers end-to-end client-side encryption for chat, audio, video, file transfer, and encrypted cloud storage of the profile, contacts, and shared data. The tools are all there, someone just needs to put it together in an acceptable cross-platform package.

Well there is BBM which does basically all that. Just the whole PIN thing can be annoying and outside North America, has a lot less brand recognition (at least when talking to any of my friends in continental Europe or South America). But at least it's not monetized in any way, and the data runs through servers encrypted.

Viber I don't think does encryption. And was just acquired by a Japanese social giant.

WeChat is run by the Chinese. And uses fb login as an option to sign in.

Past that I think any other client lacks the impetus to gain enough people to achieve critical mass.

$19B is a form of integrity all on its own We all only wish we had something valued that highly. Hell I'd be happy winning a small lottery so I wouldn't have to work again and could spend all my time w/my kids

I reckon Zuckerberg doesn't really give a damn about Whatsapp as an app. Just as with Instagram, what they were really buying was whatever Whatsapp's client database contains. I can't think why else they'd want to acquire two pieces of software which are given away free and don't really compete with them in terms of service provision anyway.

I still think there's a lot of room for a "not-Skype" that offers end-to-end client-side encryption for chat, audio, video, file transfer, and encrypted cloud storage of the profile, contacts, and shared data. The tools are all there, someone just needs to put it together in an acceptable cross-platform package.

I think the key here is "acceptable". I can think of some software that does most of this but it simply sucks in its infancy.

Yeah, that's why I said "tools". Stuff like encrypted secure transfer protocols and high-quality open source chat, audio, and video codecs are available. We just need someone a bit more ambitious and a bit more principled than WhatsApp to plug it all into usable package for the masses.

A) WhatsApp indeed does not currently keep record of your activity in their servers. In that case, Facebook is buying WhatsApp for its established user base, and it's quite obvious that it WILL start collecting data on them at some point. This is what some posters above me have already commented on.- or -B) WhatsApp actually has data on you. Even with encryption, you can record how many messages are sent, duration of calls, which phone numbers you usually dial/message, at what time, etc -- encryption doesn't protect you THAT much. In this case, Facebook is after the user data in addition to point A. It's very valuable data too -- when are you available to talk on the phone? Telemarketers would jump on this.

The interview points to option A being true, but the price seems excessive to me in that case. Instagram had around 100M users when it was bought for $1B, and they had data collection. WhatsApp was bought for 19 times that value, with "only" 10 times the userbase and supposedly no data collection.

It's possible that point A is actually true, but even in that case, it won't be true for long.

What will be most telling is what WhatsApp's founders do after this. Are they using their new-found wealth to fund a new start-up? Funding charities working to improve conditions in foreign countries? Or are they just going to buy themselves an awesome house, and fund weekly trips to Disney World for life...

Can't say I blame them for any of those, but it will speak to their motivations for selling.

Maybe they wanted to start their own dwarf tossing league? Why does their motivation for selling matter?

I still think there's a lot of room for a "not-Skype" that offers end-to-end client-side encryption for chat, audio, video, file transfer, and encrypted cloud storage of the profile, contacts, and shared data. The tools are all there, someone just needs to put it together in an acceptable cross-platform package.

I think the key here is "acceptable". I can think of some software that does most of this but it simply sucks in its infancy.

Yeah, that's why I said "tools". Stuff like encrypted secure transfer protocols and high-quality open source chat, audio, and video codecs are available. We just need someone a bit more ambitious and a bit more principled than WhatsApp to plug it all into usable package for the masses.

Then Richard Stallman's your man.

Except Stallman would never allow it on a platform anyone would want to use.

I'll confess I never used WhatsApp because I always assumed it was yet another instant messaging program. I already have SMS/MMS for phone-to-phone and Gmail/Hangouts for chats between multiple browsers, phones, and other platforms.

After reading this article it seems like it was addressing a different market--people who would rather pay a small yearly fee than view advertising or help build a targeting profile for a company's other advertising services.

I'm not necessarily anti-advertising in all circumstances (sometimes people just won't or can't pay for something directly) and it serves a purpose but I think it's great that a company offered a paid option.

If it had cost a few bucks up front I'd be more likely to use it (as opposed to another recurring fee for me to forget about) but it seems with Facebook buying them up, it will be up to another upstart to go after this market.

For a long time it was the only IM app that:

1) was available on all phone platforms (way before google hangouts on iphone)2) was any good3) other people had

I use it because I can pretty much rely on the fact that others are going to have it. Once something social has reached a critical mass like that (e.g. facebook) it becomes practically unstoppable.

My family and friends all uses Whatsapp for free. We never received any notification asking for money.It is a very convenient app. People can send text, picture, audio, push-to-talk. These can all be done regardless of whether the recipient is online or not, and you can see whether the message/data has been received by the recipient's phone (nothing to do with whether it's been read).